Correlation Between Spire Global and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Spire Global and Alcoa Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Spire Global and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and Alcoa Corp, you can compare the effects of market volatilities on Spire Global and Alcoa Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Spire Global with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Alcoa Corp.
Diversification Opportunities for Spire Global and Alcoa Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and Alcoa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Spire Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Spire Global are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Spire Global i.e., Spire Global and Alcoa Corp go up and down completely randomly.
Pair Corralation between Spire Global and Alcoa Corp
Given the investment horizon of 90 days Spire Global is expected to generate 1.79 times more return on investment than Alcoa Corp. However, Spire Global is 1.79 times more volatile than Alcoa Corp. It trades about 0.08 of its potential returns per unit of risk. Alcoa Corp is currently generating about 0.05 per unit of risk. If you would invest 516.00 in Spire Global on September 12, 2024 and sell it today you would earn a total of 869.50 from holding Spire Global or generate 168.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spire Global vs. Alcoa Corp
Performance |
| Timeline |
| Spire Global |
| Alcoa Corp |
Spire Global and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Global and Alcoa Corp
The main advantage of trading using opposite Spire Global and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Alcoa Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.| Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Performant Financial |
| Alcoa Corp vs. Sligro Food Group | Alcoa Corp vs. FitLife Brands, Common | Alcoa Corp vs. Aeye Inc | Alcoa Corp vs. Ep Emerging Markets |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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